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FINRA Fines Citigroup $15 Million for Supervisory Failures in IPO Research and Non-Public Communications

FINRA fined Citigroup Global Markets, Inc. $15 million for its failure to adequately supervise both internal and external communications related to equity research, furthermore allowing an equity research analyst to participate in two road shows promoting initial public offerings (IPOs) to investors. The investigation states that because of this failure, certain clients gained access to non-public information that Citigroup did not make available to other customers.

FINRA Case #2013036054901

According to the findings, Citigroup's decade-long misconduct took place from 2005 to 2014 and included multiple failures that prevented timely detection and/or dissemination of information that was in conflict or inconsistent with firm equity research analysts' public and published research information.

Investigators found that this failure manifested during "idea dinners" hosted by Citigroup equity research analysts and attended by certain institutional clients and sales and trading personnel. The report states that during these dinners, research analysts discussed stock picks which occasionally were inconsistent with those same analysts' public and published research.

For example, one Citigroup affiliate analyst in Taiwan selectively disseminated to certain clients information pertaining to Apple Inc. properties, including stock and AAPL iPhone order information, which was in turn disseminated to a select group of additional clients by a Citigroup equity sales employee, effectively shutting out an entire class of clients from information about Apple Inc. that Citigroup employees made available to certain other customers.

In its complaint, FINRA accused Citigroup of failing to enforce permissible communication boundaries, which in turn provided such an atmosphere for analysts to "provide certain clients with improper access to non-public research information."

FINRA also found that in 2011, a Citigroup senior equity search analyst helped two companies in creating presentations for investment banking road shows—between 2011 and 2013, Citigroup did not explicitly prohibit its staff from assisting issuers in these preparations.

If you have invested with Citigroup Global Markets or with any firm whose supervisory failures related to IPO or other equity research deficiencies, such as unequal access to research information, has proven harmful to your investment opportunities or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.

News Release: FINRA Fines Citigroup Global Markets Inc. $15 Million for Supervisory Failures Related to Equity Research and Involvement in IPO Roadshows (FINRA)

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The Law Offices of Jonathan W. Evans & Associates - California Securities Fraud Attorney
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